Mortgage Prisoners

Duncan Baker Excerpts

Wednesday 28th June 2023 Westminster Hall

[Duncan Baker (North Norfolk) (Con)]

It is a pleasure to serve under your chairmanship, Mr Robertson. I thank the hon. Member for West Dunbartonshire (Martin Docherty-Hughes), who has just made an incredibly powerful speech.

Twice this week, I have spoken in Parliament about the banks and how constituents have been let down. The situation with mortgage prisoners is a scandal in its own right, and a great problem is that it is frankly not spoken about anywhere near enough in this House. For those of us who have constituents who are affected by the situation, as I do, it is utterly heartbreaking to hear the stories. We often hear stories of people’s plight in this place. The plight and the financial situations of mortgage prisoners are particularly devastating.

I am rarely lost for words, but yesterday, when I came off a call with a constituent who had given me an update on her story, I realised I had found it an incredibly emotional experience. I will not use her name, but she is one of 195,000 people across the country affected by this problem. Many people around the country will be struggling with higher mortgage rates, but mortgage prisoners are in an entirely separate situation; they are in a degree of difficulty that is beyond what the average person is probably experiencing with their increasing mortgage rate. That is through absolutely no fault of their own, but because of the situation that occurred back in 2008 with the banking crisis.

My constituent’s situation is, I am sure, replicated among the 195,000 people affected by this problem. She is paying £1,782 a month for her mortgage. She is in arrears. She is under a Heliodor mortgage—the hon. Member for West Dunbartonshire mentioned that lender; I had never heard of it either—and is paying 9.24% to a lender that does not even have a lending licence. Many statistics suggest that the mortgage rates of millions of people across the country are shooting up by 5% or 6%, but some mortgage prisoners are paying 12% or 13%. Can anyone imagine what that pressure and stress must be doing to those households? The average mortgage prisoner is paying 9%. As has been echoed by hon. Members, we absolutely need to look at the standard variable rate, specifically for mortgage prisoners, because it is not right for families to end up in that situation. They are utterly trapped by what happened back in 2008, when mortgage books were sold off.

Another issue is that many mortgage prisoners are now older families; they got into this situation some 15 years ago, when the banking crisis first happened. In my questioning, I try to understand the situation. I ask questions such as, “Well, why can’t you exit this financial arrangement by selling up and moving on?” It is not that simple for families, who may well have children. The lady I spoke about has a family of three, and one child is disabled. Her situation is creating untold distress for her, and is affecting her mental and physical health. In constituencies such as mine, people cannot just sell their house and find another at an achievable price. I live in a beautiful area on the north Norfolk coast, where house prices are extremely high, the rental situation is extremely difficult, and the local housing list has roughly 3,000 people on it.

These are people’s homes. They are private homes. We must have some compassion and help people who, through no fault of their own, have ended up in this situation. As has been said, people cannot just move to another mortgage product, because they will simply fail to meet the lending criteria and the affordability test. My constituent was in a perfectly normal mortgage until the collapse of Northern Rock. We are told that there is help and support out there, but that is not always the case.

I am on the record as saying on Monday night that the Minister is a good man, and that when I talked about banking hubs, he listened to all the problems that I brought him about bank closures in my constituency. I say that again. If his officials are watching, will they please help my constituent? She would readily listen to help and advice. I asked her what one thing would help make the problem go away. One of her answers was, “Will the Minister engage with the mortgage prisoners group, so that he can understand the situation for so many people who have worked hard and got into this situation?”

Let me finish by saying that the Government have done a good job of dealing with the escalating problem of interest rates in recent weeks, including through the Chancellor’s meeting with all the lenders. I want those words on the record. We have worked extremely hard to help families up and down this country. Let us now go that extra mile for the cohort of people who are affected by the mortgage prisoners problem. They are hurting more than most people at the moment, because of their particular circumstances.